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Costs and benefits of adapting to climate change - the case of spatial planning and coastal flood protection in the

Karianne de Bruin Senior Research Fellow – CICERO

NZCCRI Seminar Series Friday 6th December 2013

Multi‐criteria analysis Cost‐benefit analysis

Iterative risk Cost‐ (adaptive) effectiveness management Robust Decision support tools analysis decision Decision support making tools

Portfolio analysis Real options analysis

Spatial planning

Coastal protection

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Multi‐criteria analysis Cost‐benefit analysis

Iterative risk Cost‐ (adaptive) effectiveness Robust management analysis Decision decision support making tools Portfolio analysis Real options analysis

Multi‐criteria Cost‐ analysis benefit analysis Iterative risk Cost‐ (adaptive) effectiveness Robust management analysis Decision decision support making tools Portfolio analysis Real options Realanalysis options

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Climate change Adaptation Uncertainty Evaluation methods Source: de Bruin (2011)

Adaptation decision

- Whether to adapt? - What to adapt? - How much to adapt? - When to adapt?

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Cost-benefit analysis

Urgency Feasibility Costs …

321€€€

5 55€

43€5

…

Cost-benefit analysis

Critical points - Data requirement - Types of costs and benefits - Discounting - Uncertainty

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Uncertainties

Physical effects of climate change

Economic - Costs and benefits of adaptation options - Irreversibility & flexibility

Policy - Time horizon of decision-makers - Feasibility

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Cost-benefit analysis - Plus

Urgency Feasibility Costs …

32€€€

5 5 €

43 €

…

Spatial planning

Photo: Karianne de Bruin

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Context

Source: Rijkswaterstaat

Costs and benefits

Costs: Investment costs and maintenance costs

Primary benefits correspond to the objective of the adaptation measures – avoided direct damage

Secondary benefits which result from the adaptation but are not its primary objective

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Zuidplaspolder

Based on Melmer, J. (Hoogheemraadschap Schieland en de )

Spatial planning ZPP

- Dutch policy makers selected the ZPP for urban developments, focused on new residential, commercial and further agricultural development (greenhouse horticulture) - Province + NGOs + municipalities + water authority made a master plan for the spatial development - Hotspot Zuidplaspolder project

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Climate change impacts

Flooding from river discharge - Failure probability of the flood defence - Simulated water flow in the ZPP - Potential economic damage

Excessive precipitation - Frequency inundation extreme rainfall event - Model local water levels - Damage caused by inundation

Zuidplaspolder

Based on Melmer, J. (Hoogheemraadschap Schieland en de Krimpenerwaard)

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Zuidplaspolder

Based on Melmer, J. (Hoogheemraadschap Schieland en de Krimpenerwaard)

Options

1. Water storage for housing and greenhouse development in the northern part of the ZPP 2. Climate robust ecological network (entire area of the ZPP) 3. Climate robust design of a residential area of Nieuwerkerk Noord 4. Climate robust design of a residential area of

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Source: de Bruin et al. (2013)

Reference situation

0-alternative: reference situation for the polder area based on the current master plan for the spatial development of the ZPP, but without additional adaptation measures

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Quantified costs and benefits

- Investment costs - Maintenance costs - Avoided damages - Effects on nature, landscape and water values associated with alternative land use types (WTP per year additional municipal tax)

Net present value (million €)

Adaptation option Discount rate 2.5% Declining 4% Water storage Noord -17.2 -19.6 -22.8 Ecological network entire polder 59.7 50.34 37.7 Climate robust design Nieuwerkerk Noord -17.81 -18.39 -19.3 Climate robust design Moordrecht Noord -19.55 -19.62 -19.72

Adaptation strategy (sum of all options) 5.14 -7.27 -24.12

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Lessons learned

- Sensitivity of NPV results; time horizon, long-term costs and benefits and the discount rate - Inclusion of primary and secondary benefits - Awareness of underlying assumptions and sensitivity of results - ‘What-if’ setting

Follow-up

Source: Xplorelab

Hotspot Zuidplaspolder - Xplorelab The Dutch government granted 24 million € for the implementation of sustainable and climate proof pilots in the Zuidplaspolder

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Coastal flood protection

Photo: Karianne de Bruin

Coastal flood protection

Context: flood protection, safety standards, climate change, stakeholders

Uncertainty: Sea-level rise, timing of resolution of uncertainty

Decision makers: Coastal managers

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Decision support

Evaluation of local coastal adaptation options

Assess how climate change uncertainty affects the decision to invest in coastal flood protection

How the incorporation of stakeholder perceptions changes the optimal investment decision

Local coastal adaptation

Optimal coastal protection under climate change uncertainty for a Dutch coastal area.

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Local coastal adaptation

Current protection ?

Sea level rise

+ +

+ WB21 midden scenario (zeespiegelstijging inclusief bodemdaling)

Source: KNMI (2009)

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Investment model

An investment model is developed that simulates optimal decision-making in coastal flood protection, incorporating flexible timing of investment in coastal adaptation to uncertain climate-induced sea-level rise.

Local coastal options

NonStructural‐structural

Focus on investment in structural and/or non-structural coastal adaptation options.

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Investment model

Two decision moments: - Investment decision (t=0) - Adjustment of investment decision (t=k)

Two random variables - Climate change uncertainty - Resolution of uncertainty

Decision tree

Source: de Bruin (2011)

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Costs and benefits (1)

Preliminary costs of coastal flood protection measures based on ARCADIS (2010) (1000€) Non-structural Structural Costs Fixed investment cost 29458 38230 Annual Cost 48 36

Maximum additional annual flood damage with 1.0m climate induced sea-level rise is 1 400 000 € (Based on Deltares (2010))

ARCADIS (2010). MKBA Kustversterking Katwijk. (In English: Social Cost-Benet Analysis of coastal flood protection in Katwijk). ARCADIS, , the Netherlands.

Deltares (2010). Overstromingsrisico en droogte in een veranderend klimaat, verkenning van wegen naar een klimaatveranderingsbestendig Nederland (In English: Flood risks and droughts in a changing climate, exploring roads towards a climate proof Netherlands). Deltares, Delft, the Netherlands.

Perceptions

Stakeholder perceptions are identified through workshops to gain insight into stakeholders’ attitude towards uncertain future impacts of climate change coastal flood protection

Photo: Karianne de Bruin

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Perceptions

Indirect stakeholders - Current safety standard - Flexibility of option - Robust for future climate change

Direct stakeholders - Impact on tourism sector - Spatial quality - Parking issue

Costs and benefits (2)

Preliminary costs of coastal flood protection measures based on ARCADIS (2010) (1000€) Non-structural Structural Costs Fixed investment cost 29458 38230 Annual Cost 48 36 Cost tourism sector during implementation 473 473 Annual negative costs (benefits) Tourism revenues -620 -1250 Extra nature (per ha) -45 -29

ARCADIS (2010). MKBA Kustversterking Katwijk. (In English: Social Cost-Benet Analysis of coastal flood protection in Katwijk). ARCADIS, Rotterdam, the Netherlands.

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Results

Optimal initial investment decision depends on the expected waiting time for the resolution of uncertainty, the discount rate, the cost structure of the measures and the inclusion of start-up costs, and tourism and nature benefits (ancillary benefits)

Initial investment decision in structural and non-structural coastal adaptation measures

(a) Structural (b) Non‐structural

Source: de Bruin (2011)

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Follow-up

www.kustversterkingkatwijk.nl

Thank you for your attention

Contact details: [email protected]

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References

- De Bruin, K., H. Goosen, R. Groeneveld and E.C. van Ierland (2013). Costs and benefits of adapting spatial planning to climate change: lessons learned from a large-scale urban development project in the Netherlands. Regional Environmental Change - published online (doi: 10.1007/s10113-013-0447-1)

- De Bruin, K. and E. Ansink (2011). Investment in flood protection measures under climate change uncertainty. Climate Change Economics 2(4): 321-339 (doi: 10.1142/S2010007811000334)

- De Bruin, K. (2011). An economic analysis of adaptation to climate change under uncertainty. PhD thesis Wageningen University (http://edepot.wur.nl/182256)

Contact details: [email protected]

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